When it comes to protecting your assets, real estate presents a significant challenge. Unlike other types of assets — such as stocks, bonds, and bank accounts — real estate can’t be moved to another jurisdiction. If you’re concerned about your real estate’s vulnerability to creditors’ claims, here are several strategies to consider.

As you review these techniques, be mindful of fraudulent conveyance laws, under which a court can undo transfers made with the intent to hinder, delay, or defraud existing or reasonably foreseeable creditors. In light of these laws, the earlier you implement asset protection strategies, the better.

Give it away. If you don’t mind parting with the title to property, transferring it to your children or other family members is a simple but effective way to place it beyond your creditors’ reach.

Establish a QPRT. A qualified personal residence trust (QPRT) is an irrevocable trust designed to hold your principal residence or a vacation home for the benefit of your children or other beneficiaries. You retain the right to use the home during the trust term, and once you transfer property to the trust, it’s protected against creditors’ claims (subject to fraudulent conveyance laws). In addition, so long as you outlive the trust term, a properly structured QPRT can be used to reduce or even eliminate gift and estate taxes attributable to the home.

Take advantage of state law. Many states permit married couples to own their principal residence (and, in some cases, other types of real estate) as “tenants by the entirety.” This form of ownership shields the property from claims by either spouse’s creditors, but not from joint creditors. A few states offer unlimited homestead exemptions, which protect one’s principal residence from creditors regardless of marital status.

Set up an LLC. One of the best ways to protect business or investment real estate is to transfer it to a properly structured and operated limited liability company (LLC). So long as the property is held in the LLC, it’s protected against claims by your personal creditors. In addition, this structure protects your other assets against claims by the LLC’s creditors (a negligence claim by a tenant, for example).

Keep in mind that the level of asset protection available varies from state to state, and there may be exceptions for certain types of claims, such as taxes or child support.

SURVEY SAID . . . .

If you had to give the top five answers of what Bowman & Company partners and staff were doing at lunch on April 1, 2016, you would probably guess:

  1. Working through lunch, and dinner, and the whole night through . . .
  2. Not sleeping . . .
  3. Eating at their desks . . .
  4. Missing their families and
  5. Going crazy!!

But you would be wrong!!  If you said playing fun games in the parking lot of the office at lunchtime, then you would be awarded 100 points for the number one and only correct answer!!!

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This year’s annual “Fun Friday” was an amplified version of Family Feud.  The entire office broke up into several teams of six and moved from station to station trying to guess the top answers to “surveys”.  Teams had to guess the top answers to questions such as “Name something that could happen if you don’t pay the IRS”, to “”Besides people, name something you’d try to save if your house was on fire”.

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Fun Friday has become a much anticipated tradition at Bowman & Company, designed to take us out of brain-drain tax zone for an hour and into a world of friendly competition and downright silliness.  This year marks our 11th Fun Friday!!  Other annual competitions have included going to local stores (i.e., Target, Lowes, etc.) and using them as a backdrop to create a home-grown movie on smart phones, making and launching rocket ships, Survivor – Bowman-style, and in 2013 we had a tournament of children’s games, showing off masterful skills in games such as Hi-Ho Cherry-O, Operation, and Hungry Hungry Hippos.  Fun Friday also includes a spectacular lunch.

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The winning team this year consisted of Family Feud Wizards (from L to R):  Nolan, Tobbie, Ryan, Lisa, Julie and Dana!

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